Inflation Increased in Jan 2010

Indian economies wholesale price index rose to 8.56 per cent in Jan 2010 from 7.31 pc in Dec 2009, the government data showed on Monday, Feb 15.According to the data, the WPI, used as a measure of inflation, rose 0.8 pc to 248.5 from 246.5 in Dec 2009.
Sugar prices rose by 58.96 per cent in Jan year-on-year while potatoes turned costlier by 53.39 per cent and pulses by 45.64 per cent. On monthly basis, prices of masur increased by 9 per cent, arhar by 6 per cent and wheat by 4 per cent.Fuel index rose by 1.8 per cent due to higher prices of naphtha that rose 21 per cent. Furnace oil rose 6 percent while bitumen, non-coking coal and light diesel oil rose 3 per cent each.The Reserve Bank of India (RBI) had projected inflation will be around 8.5 per cent by the end of the current financial year in Mar 2010.The country's food inflation touched a decade's high of about 20% in December before moderating to around 18% in February.

Indian Economy Getting its Right Path

Indian policy makers pride themselves on the fact that the Indian economy was able to pull out of the Global Financial Crisis (GFC) relatively unscathed, with real GDP growth rate falling to 6.7 per cent in 2008-09 as compared to the 9 per cent in 2007-08 and expected to rise above 7 per cent in 2009-10. At the onset of the GFC, many commentators had expected a collapse of growth, with some even predicting a return to the sluggish growth of the mid to late 1990s.

Thankfully,the Indian economy proved the predictors of doom wrong. A number of factors have been ascribed to explain this performance: high consumption in India, as compared with China, and lower exposure to the global economy, again as compared with China. High home consumption is desirable as it gives support to the domestic economy in the face of a collapse of international trade, as happened during the GFC. Additionally, lower exposure to international trade reduces the impact of external shocks. The existence of substantial controls on the banking sector is said to explain the fact that no Indian bank had to be ‘rescued’. In addition, credit also is sometimes given to ‘good policy design’ by the government.